\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Event:
On March 23, 2022, the company released its annual report for 2021, which realized an operating revenue of 3.28 billion yuan in 2021, with a year-on-year increase of 45.07%; The net profit attributable to the parent company was 1.041 billion yuan, a year-on-year increase of 18.57%; Net profit deducted from non parent company was 840 million yuan, with a year-on-year increase of 37.32%.
The 21-year annual report is generally in line with expectations. As the leader of China’s office software, the company continues to innovate and expand its product line and create a cloud office ecosystem, which is expected to continue to benefit from mobile office and software localization. We are optimistic about the company’s high growth in the field of office software and give a “buy” rating.
Comments:
Q4 revenue maintained a high growth rate, contract liabilities increased significantly, and the future can be expected: Q4 achieved a revenue of 908 million yuan in a single quarter, a year-on-year increase of 19.82%, and the net profit attributable to the parent company was 193 million yuan, a year-on-year increase of – 31.64%. The main reason for the decline in net profit was that the number of R & D personnel increased by 49.68%, resulting in a year-on-year increase of 99.1% in R & D expenses. In Q4, the added value of contract liabilities in a single quarter was 308 million yuan, with a year-on-year increase of 55%. At the end of 21 years, the company’s contract liabilities reached 1.421 billion yuan, with a year-on-year increase of 71%; Contract liabilities can reflect the future growth capacity of SaaS company, indicating that the company’s business is in a period of rapid development, and the future revenue growth potential can be expected.
The business of information technology and innovation grew explosively, the monthly activity of users grew steadily, and both institutional and individual users made efforts at the same time: in terms of information technology and innovation business, the company achieved a revenue of 962 million yuan from authorized business of Chinese institutions during the reporting period, with a year-on-year increase of 107.1%, reflecting the rapid growth of China’s information technology and innovation industry, the high growth of government and enterprise demand, and the rapid growth of orders for streaming office software products, Xinchuang cloud platform accelerates participation in digital government projects; In terms of institutional subscription, during the reporting period, the company achieved a revenue of 446 million yuan from institutional subscription and service business, an increase of 23.40% over the same period last year. The number of registered enterprises in the company’s public cloud market has exceeded one million, and the user stickiness is high. For individual clients, the revenue from personal office service subscription business during the reporting period was 1.465 billion yuan, an increase of 44.20% over the same period of last year, mainly due to the continuous and stable growth of the company’s monthly live users on a high base. By the end of 2021, the number of monthly active equipment of the company’s main products was 544 million, with a year-on-year increase of 14.05%; Among them, the company’s cumulative annual paid individual members reached 25.37 million, with a year-on-year increase of 29.31%. The number of files uploaded to the cloud by individual and small and medium-sized enterprise users through the public cloud increased from 17.5 billion at the end of 2018 when the company proposed the cloud office strategy to about 130 billion. The cloud effect of users was obvious and the payment rate increased significantly. In order to optimize the user experience, during the reporting period, the company strategically contracted the Internet advertising business, and the revenue decreased by 3.01% year-on-year, which further drove the user stickiness.
The performance of the draft equity incentive is clear and conducive to the long-term development of the company: the company plans to grant 1 million restricted shares to 127 core managers and technical backbones, accounting for about 0.22% of the total share capital, including 800000 shares for the first time and 200000 shares reserved. Independent pricing will be adopted, and the price shall not be less than 45.86 yuan. The assessment target will be based on the performance in 2021, with a compound growth rate of about 15% from 2022 to 2024. It is expected that the performance appraisal target of this equity incentive is less difficult and will not have a significant impact on the business, which will help the company bind core technical backbone talents and promote long-term development.
Profit forecast: we expect the net profit of the company in 202223 to be 1.457-1.906 billion yuan, yoy + 40.01% / + 30.74%, equivalent to EPS of 3.16/4.14 yuan. At present, the corresponding PE of A-share price is 60 / 46 times, giving a “buy” rating.
Risk tips: 1. The R & D and promotion of new products are not as expected; 2. The digital transformation and demand of enterprises are less than expected; 3. The risk of intensified market competition.
